STATE HOUSE, BOSTON, MAY 29, 2014….Gov. Deval Patrick’s inclusion in his economic development package of an end to most non-compete agreements drew the most heat during a Beacon Hill hearing on Thursday, but a top House lawmaker pointed to other parts in the $100 million package as potentially higher priorities.
“In my view – I won’t speak for the governor as to whether it’s his greatest single priority – but I don’t think it’s the most significant matter before us for our consideration in terms of economic development,” said Rep. Joseph Wagner, the House chairman of the Joint Committee on Economic Development and Emerging Technologies, which heard the bill (H 4045). Wagner said he has heard mostly opposition to the non-compete provision from businesses and industries that have come to his office.
Wagner (D-Chicopee) favorably cited other parts of the bill, such as $20 million for a middle skills job training grant fund for vocational technical schools and community colleges to provide manufacturing and IT training, and additional funding, to the tune of $10 million, for a brownfields redevelopment fund for environmental site assessments and clean-ups in economically distressed areas.
House Speaker Robert DeLeo has talked about putting forward his own economic development package this spring.
“I think you’ll see a bill from committee that in many ways reflects the governor’s priorities, which I think reflect the speaker’s priorities,” Wagner told the News Service. “I think the governor has echoed themes that the speaker has been talking about for many months, and so I think the bill from committee will hit on those themes and areas of policy, and we’ll add others that will strengthen the proposal before us.”
Asked about what those potential additions may be, Wagner declined to elaborate. “It’s a work in progress,” he said of the committee’s bill.
As for a timeline for the bill, Wagner said, “Sooner rather than later.” That was the same response he gave Glen Shor, Patrick’s secretary of administration and finance, when Shor appeared before the committee in support of the governor’s version.
The provision ending most non-compete agreements drew support and opposition from members of the Bay State’s business community, and a defense from Shor.
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Shor told lawmakers that non-compete agreements can force workers to find jobs outside their field or stay unemployed for the duration of the agreement. “In one recent example, a teenage camp counselor signed a non-compete agreement one summer, then was denied a job at another camp the following summer on account of her non-compete,” he said.
Shor said the governor’s proposal does not cover all non-compete agreements or restrictive covenants. Non-disclosure, non-solicitation, no-hire and forfeiture agreements and non-compete agreements in a sale of a business would be unaffected, he said.
Patrick also proposed to adopt the Uniform Trade Secrets Act in his bill to protect proprietary information.
The Greater Boston Chamber of Commerce and the Associated Industries of Massachusetts registered their opposition to banning non-compete agreements.
AIM’s executive vice president for government affairs John Regan said a recent survey of its member companies, including big and small employers, showed they consider keeping non-compete agreements to be a priority. “The non-compete issue is really about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefits as long as employees are a part of the process,” Regan said in his testimony.
After Jim Klocke, the Greater Boston Chamber of Commerce’s executive vice president, offered his testimony, Sen. Gale Candaras, the co-chair of the committee asked, “So no reforms needed?”
Klocke responded that case law exists on non-compete agreements, and if reforms are needed, the state must be consistent with court rulings.
The New England Venture Capital Association said it supports banning non-compete agreements, arguing that the agreements stifle innovation and job creation efforts. “I literally cannot imagine having a conversation with a valued employee that starts out, ‘There is a better job for you and your family elsewhere, but I am going to prevent you from taking it. Now go back and do something amazingly creative for me and the company,’” Joshua Boger, a board director at Vertex Pharmaceuticals, said in his testimony.
Rep. Lori Ehrlich (D-Marblehead) pushed for curbed non-compete agreements, instead of a ban, telling the committee that she has filed a bill putting a six-month limit on the agreements. She said they are becoming overused and now are being deployed in some pizza parlors and hair shops.
Max Perlman, an attorney at Hirsch Roberts Weinstein LLP who is familiar with non-compete agreements, said he is in favor of reform but concerned about their abolition. A ban would remove an “important tool” that a business has to prevent the theft of trade secrets.
Patrick’s bill also creates a $15 million “transformational development fund” for Gateway Cities like New Bedford and Lawrence, gives municipalities more control over liquor licenses, and increases financing levels for public-private infrastructure projects within the so-called I-Cubed program. Total financing allowed under I-Cubed would be raised to $600 million from $325 million.
Rep. Antonio Cabral (D-New Bedford) said the governor’s bill didn’t go far enough in certain areas, and referred to its level of funding for programs focused for Gateway Cities as “insufficient.”
The venture capital industry in greater Boston “doesn’t need more subsidies from the commonwealth,” he told the committee.
Cabral asked the committee to consider the Gateway Cities Legislative Caucus’s bill (H 311), which he said provides more resources to New Bedford, Lawrence and Lowell.
The governor’s bill also sets aside $3 million for a “global entrepreneur program fund” based out of the Mass Tech Collaborative, and would place foreign students without a visa at public and private higher education institutions to help them start or grow new businesses after graduation.
NAIOP, the commercial real estate development association, voiced its support for several provisions, including the I-cubed changes, brownfields redevelopment, and using an auctioneering company to sell off land owned by the state Transportation Department (MassDOT).
The transportation department currently issues a request for proposal, which NAIOP said is often only viewed by abutters resulting in a small number of bids that come in below market price. “By using an auctioneering company 100 percent of the sales proceeds will go to MassDOT,” wrote Tamara Small, senior vice president of government affairs at NAIOP Massachusetts. “In addition, the auctioneering company will ensure that many more people view the offer, resulting in more competition, and most likely, a higher price for the land.”
Copyright 2014 State House News Service